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Adina Erridge

How the Government Shutdown Affects You

Monday, October 7, 2013 - Article by: Adina Erridge - Wallick and Volk - Message

As you are aware Federal agencies have shut down large portions of the government effective today October 1, 2013. The information outlined below addresses the impact on the mortgage industry:HUD / FHA:The FHA should not be significantly impacted, providing the shutdown is brief. HUD has provided the following information that applies to our daily operations:oFHA will be able to endorse single family loans, however, only a limited number of FHA staff will be available, so the process may take longer.oLimited FHA staff will be available to respond to questions, emails or other correspondence.oYou will still be able to obtain a FHA case number from FHA Connection.oCAIVRS and FHA Total Scorecard will still be available.

Should FHA run out of commitment authority during a shutdown, then all lenders' Lender Insurance approval will be temporarily suspended.VA:Continue originating VA loans; the Department of Veterans Affairs (VA) will continue to operate if there is a government shutdown. oObtaining the veteran's Certificate of Eligibility online through the webLGY will still be available.oSubmitting applications for new COEs and follow up on COEs requiring more research with the Atlanta Eligibility Center will still be available.Ordering appraisals the Veterans Information Portal will still be available.Internal Revenue Service (IRS):The IRS has indicated that they will not process any forms, including the issuance of tax return transcripts (Form 4506T) during a government shutdown, which will delay loan processing.Social Security Administration (SSA):In previous shutdowns, the SSA has only retained employees that deal directly with the processing of new claims and benefits.

The likelihood is we would not be able to continue to verify SSNs through the SSA, which will delay loan processing. Expect delays with obtaining tax return transcripts and SSA verifications. Rural Housing / USDA:o As mentioned in an earlier email, on Friday 9/27, USDA Rural Development issued notice that the existing eligible areas will be preserved until further notice. This is good news! When the Continuing Resolution (CR) passes the eligible areas will remain eligible through the expiration of the CR allowing congress and others more time to find a permanent solution.o Regarding the CR, now that the government is partially shut down, the USDA employees have been furloughed - Conditional Commitments and Loan Note Guarantees won't be processed. If it's a short shutdown then the impact should be minimal, if at all. If it's an extended shutdown then this will affect turn-times, lock expirations, and purchase contracts because Conditional Commitments won't be issued. When a CR is passed, we fully expect the USDA will issue Conditional Commitments with the language "subject to availability of funds..." until funds are loaded. Wallick and Volk will fund USDA loans with this modified "subject to availability of funds..." language. Historically, it usually takes about 3-4 weeks to load funds and generate Loan Note Guarantees.

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